The second-quarter earnings picture for the transportation sector has been unimpressive. Earnings of 88.3% of the market capitalization of the sector declined 9.8% on a 3.9% revenue decline. The earnings and revenue beat ratios came in at 75% and 33.3%, respectively.
As such, transportation ETFs have seen rough trading over the past month. iShares U.S. Transportation ETF IYT, First Trust Nasdaq Transportation ETF FTXR and SPDR S&P Transportation ETF XTN have lost 5.7%, 9.3% and 5.7%, respectively. The latest global market rout also took a toll on the sector.
For a better understanding, let’s delve into the results of some well-known industry players.
Transportation Earnings in Brief
The world’s largest package delivery company, United Parcel Service UPS, returned to volume growth in the United States during the second quarter for the first time in nine quarters but failed to deliver enough on a turnaround plan to cut costs and increase volumes. The company reported earnings per share of $1.79, which missed the Zacks Consensus Estimate of $1.98 and declined 29.5% from the year-ago quarter. Revenues dropped 1% year over year to $21.8 billion and fell short of the Zacks Consensus Estimate of $22.31 billion. United Parcel revised its revenue guidance to $93 billion from $92-$94.5 billion for the year (read: UPS Tailspin Hits Transport ETFs: Should You Buy the Dip?).
Major railroad company Norfolk Southern Corp NSC reported better-than-expected results, while Union Pacific UNP missed estimates on revenues. Norfolk topped the consensus estimate for earnings by 21 cents and the revenue estimate by $22 million. Union Pacific outpaced the earnings estimate by 4 cents but lagged the revenue estimate by $52 million.
U.S. airlines Delta Air Lines DAL and United Airlines UAL reported mixed results. Delta reported earnings per share of $2.36, missing the Zacks Consensus Estimate by a penny. Revenues of $16.7 billion edged past the consensus mark of $16.25 billion. United Airlines reported earnings per share of $4.14, beating the Zacks Consensus Estimate of $3.97. Revenues of $14.99 billion came in below the estimated $15.13 billion.
Last but not least, leading trucking carrier J.B. Hunt JBHT missed estimates for earnings by 19 cents per share and for revenues by $107 million (see: all the Industrials ETFs here).
ETFs in Focus
iShares U.S. Transportation ETF (IYT)
iShares U.S. Transportation ETF tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a small basket of 44 securities. The six in-focus firms make up a combined 41.1% share. From a sector perspective, rail transportation and air freight & logistics take the largest share at 28.9% and 21.5%, respectively, while cargo ground transportation, passenger ground transportation and passenger airlines round off the next three spots with double-digit exposure each.
iShares U.S. Transportation ETF has accumulated $651.2 million in its asset base and charges 40 bps in annual fees. It has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
SPDR S&P Transportation ETF (XTN)
SPDR S&P Transportation ETF tracks the S&P Transportation Select Industry Index, holding 44 stocks in its basket. The in-focus firms account for at least 2% share each. About 33% of the portfolio is dominated by cargo ground transportation, while passenger airlines and air freight & logistics round off the next two with double-digit exposure each (read: 3 Sector ETFs & Stocks to Bet on July Jobs Data).
With AUM of $201.7 million, SPDR S&P Transportation ETF charges 35 bps in fees per year from its investors and has a Zacks ETF Rank #2 with a High risk outlook.
First Trust Nasdaq Transportation ETF (FTXR)
First Trust Nasdaq Transportation ETF offers exposure to the 41 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. The in-focus six firms represent a combined 23.8% share. Automobiles, delivery services, airlines, and railroads are the top sectors, accounting for double-digit exposure each.
First Trust Nasdaq Transportation ETF has amassed $35.1 million in its asset base and charges 60 bps in annual fees. FTXR has a Zacks ETF Rank #2.
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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
Union Pacific Corporation (UNP) : Free Stock Analysis Report
Norfolk Southern Corporation (NSC) : Free Stock Analysis Report
J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
iShares U.S. Transportation ETF (IYT): ETF Research Reports
SPDR S&P Transportation ETF (XTN): ETF Research Reports
First Trust NASDAQ Transportation ETF (FTXR): ETF Research Reports